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Part 1 – Chapter 10: Subaru's Sales Boom Thanks to the Weaker Yen – (Closing case...

Part 1 – Chapter 10: Subaru's Sales Boom Thanks to the Weaker Yen – (Closing case on page 293). Analytically address this statement: Explain how this liability became an asset as the Japanese yen began to depreciate versus the U.S. dollar.

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When Japanese yen depreciates versus the U.S. dollar, it means that 1 us dollar can but more units of Japanese yen.

So, that implies that if have a liability to pay in Japanese yen, then we can now pay through less US dollar as Japanese yen as depreciated. Therefore, liability becomes an asset now.

For example- earlier if 1 us dollar = 10 Japanese yen, now if it depreciates and become 1 us dollar = 20 Japanese yen, then using less US Dollars, we can buy more Japanese yen and decrease our liability.

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